After a hot summer, with well above normal demand, the tables have turned in recent weeks. We have seen a much cooler pattern here in the month of September.

This has resulted in the lowest September weather demand seen in quite some time. In fact, total demand, as measured by Gas-Weighted Degree Days (GWDDs), is set to come in lower than any September since 2009, and significantly under levels seen in the past two years.

The picture is not looking much better as we prepare to move into the month of October, with some higher demand this week, but signals pointing toward the return of a lower demand regime after this week, though this time by way of warming, as we reach the time of year where warmer weather turns bearish, thanks to declining average temperatures as we move closer to the cold season.

This is not welcome news for natural gas bulls, given that storage sits at very high levels, especially in the key South-Central region (in closest proximity to Henry Hub).

Prompt month natural gas prices have been all over the place over the last few weeks, as the market struggles to find where to assign fair value.

Today is the last day that the October contract will be "prompt month", as it expires this afternoon> November will become the new "prompt month" starting tomorrow, though is trading much higher than the October contract. Here is the spread between the two contracts (the V/X spread), with the negative value showing how much of a discount October is trading vs November.

With record-high storage levels and generally weak weather demand for the foreseeable future, we will likely need to see more gains in LNG volumes, or declines in natural gas production, in order to avoid downward pressure on the November contract over the next couple of weeks, though there is a bullish case that can be made once we are able to move beyond injection season, pending how winter weather shapes up, of course.